Robert Backer: Demystifying VA Loan Myths

Wednesday, March 24, 2021 - by Robert Backer, president, Greater Chattanooga Realtors
A few weeks ago, I wrote about how homebuyer “love letters” are becoming more common in this low inventory market and discouraged using these letters. Often these letters include the buyer’s demographic information that the seller could use, knowingly or through unconscious bias, for accepting or rejecting an offer, which could lead to an alleged violation of the Fair Housing Act.
 
I’ve recently observed another form of discrimination that isn’t against one of the protected classes but is equally troublesome.
Sellers are shying away from buyers who wish to utilize a benefit earned for service in the armed forces – the VA Loan. I’ve had the honor and privilege of serving veterans throughout my real estate career, and I’m saddened to see veterans potentially left out of the home buying process when purchasing via a VA loan.
 
VA loans are issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs. A VA loan is a $0-down mortgage option for those eligible who can use it to purchase their primary residence or refinance an existing mortgage.
 
Since 1944 when VA loans came into existence, the VA has provided more than 22 million loans. Yet, there are many misconceptions about VA loans, one of which is they take longer to close. However, according to Ellie Mae, the average time it took to close on a VA loan in 2020 was 51 days, which is only two days longer than an FHA loan and only three days longer than a conventional loan. And yes, with a VA loan sometimes an appraiser can be tougher on a house. This is because a VA loan requires that the property to be "safe and sanitary." This doesn’t mean that there can’t be any repairs to be made, just that the property overall should be in good shape. 

Some argue that VA appraisals take longer, but in reality, the process is the same – once seller and buyer bind a purchase and sale agreement, the lender orders the appraisal, which is assigned to the next available VA-approved appraiser.

When working with clients to sell a property, a realtor can specify in the Multiple Listing Service (MLS) what type of loans the seller will accept and explain the differences between them. With a realtors guidance, the seller can also decide if a particular loan type would work best for individuals looking to purchase their property. whether a house would work best with VA and/or FHA loans. There are a few minor costs to a seller to go with a VA loan but in the end these are very minimal.
 
Selling and buying a home takes risks from both sides of a transaction. One could argue pros and cons with nearly every transaction, and even all-cash purchases can meet a few snags between contract and closing. With all parties working together and acting in good faith, realtors can assist in keeping the transaction moving to closing, regardless of loan type. While a seller has the right not to entertain a specific loan type, I urge my fellow realtors and the general public to honor the sacrifices made by the very people who have the opportunity to use these loans. It should be obvious, but we all owe the deepest gratitude to those who have given so much. Realtors should do all they can to protect all homeowners, regardless of their financing.
 
Throughout my real estate career, I’ve been honored and privileged to work with veterans to purchase a home. Our Realtor Code Of Ethics demands all realtors to “protect and promote the interests of their client” and to treat all parties honestly. Are we doing that if we continue to perpetuate myths about certain loan products such as VA loans? Regardless of being defined by the Fair Housing Act or our Code of Ethics, helping everyone achieve homeownership is all of our jobs – in our personal lives, our workplace and, in my case, the housing market.  Realtors should do our utmost to serve those who have served all of us. That’s Who We R.


Robert Backer: Licensed Versus Competent

Developer Sells 4 Acres Near Northgate Mall For $2.5 Million

Chattanooga Printing & Engraving Property In North Chattanooga Sells For $2.4 Million


In both Tennessee and Georgia, there is no license specific to residential or commercial real estate. Regardless of the transaction type, we must adhere to the rules and laws in that regard. ... (click for more)

Developer Ken DeFoor is selling four acres near Northgate Mall for $2.5 million. The sale is to to Dominion Ridgeview Llc. Mr. DeFoor earlier had proposed a garden-style apartment complex ... (click for more)

Chattanooga Printing & Engraving is selling its longtime site in North Chattanooga for $2.4 million. A developer is planning a live/work project at the site. The sale includes 110 Somerville ... (click for more)



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Robert Backer: Licensed Versus Competent

In both Tennessee and Georgia, there is no license specific to residential or commercial real estate. Regardless of the transaction type, we must adhere to the rules and laws in that regard. As realtors, we have a license to practice either residential or commercial, but should we? It depends. Article 11 of the Realtor Code of Ethics identifies nine real estate disciplines ... (click for more)

Developer Sells 4 Acres Near Northgate Mall For $2.5 Million

Developer Ken DeFoor is selling four acres near Northgate Mall for $2.5 million. The sale is to to Dominion Ridgeview Llc. Mr. DeFoor earlier had proposed a garden-style apartment complex for the site just north of the mall at 2767 Northpoint Blvd. It is located between Red Lobster and Steak 'n Shake. (click for more)

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